Erskine Motors Co. v. Chevrolet Motor Co.

• Court: North Carolina Supreme Court
• Writing for the Court: CLARK, C.J.
• Citation: Erskine Motors Co. v. Chevrolet Motor Co., 180 N. C. 619, 105 S. E. 420 (N.C. 1920)
• Decision Date: 24 December 1920
• Docket Number: 543.
• Parties: ERSKINE MOTORS CO. ET AL. v. CHEVROLET MOTOR CO. ET AL.

105 S.E. 420

180 N.C. 619

ERSKINE MOTORS CO. ET AL. v. CHEVROLET MOTOR CO. ET AL.

No. 543.

Supreme Court of North Carolina

December 24, 1920

Appeal from Superior Court, Buncombe County; Long, Judge.

Action by the Erskine Motors Company and others against the Chevrolet Motor Company and another. Defendants' motion to remove action to the federal court was denied, and the defendants appeal. Affirmed.

In ascertaining whether a court properly overruled motion for removal to federal court on ground of diversity of citizenship, the court will not consider anything beyond inquiry of whether there was a bona fide intention to obtain a joint judgment and whether there was colorable ground for such judgment as the record stood when the removal was denied, and will not consider whether a flaw in the declaration could be found on special demurrer.

One of the plaintiffs, Erskine Motors Company, is a partnership composed of J. V. Erskine and M. A. Erskine, who are residents of North Carolina, and J. M. Erskine, a resident of Tennessee, and one of the defendants is a resident of New Jersey, and the other is a resident of Georgia.

On December 1, 1919, the copartnership entered into a written contract with the defendant to recover damages for the alleged breach of which this action is brought. On February 9, 1920, after the breach of said contract by the defendants the members of said copartnership formed a corporation under the same name, and thereafter did business as a corporation. The copartnership did not assign or transfer to the corporation any rights or claims for damages against defendants under said contract or on account of the breach thereof.

This motion by the defendants to remove the action to the federal court was denied, and the defendants appealed.

Merrimon Adams & Johnston, of Asheville, for appellants.

Mark W Brown, of Asheville, for appellees.

CLARK C.J.

This action could not have been originally brought in the United States District Court under sections 28 and 51 of the Judicial Code (U. S. Comp. St. §§ 1010, 1033), because one of the plaintiffs is a nonresident of North Carolina, and both defendants are nonresidents of this state.

"Any suit of a civil nature, at law or in equity, arising under the Constitution or laws of the United States, or treaties made, or which shall be made, under their authority, of which the District Courts of the United States are given original jurisdiction by this title, which may be now pending or which may hereafter be brought, in any state court, may be removed by the defendant or defendants therein to the District Court of the United States for the proper district." 5 Fed. Stat. Anno. 16.

It is provided in 5 Fed. Stat. § 51, p. 486, that--

"Where the jurisdiction is founded only on the fact that the action is between citizens of different states, suit shall be brought only in the district of the residence of either the plaintiff or the defendant." 23 R. C. L. 624, § 21.

Citizenship cannot be predicated of a partnership, and federal jurisdiction of a suit by or against a partnership, so far as it depends on diverse citizenship, is determined by the citizenship of the individual members. 5 Fed. Stat. Anno. 97; 23 R. C. L. 651, § 50; McLaughlin Bros. v. Hallowell, 228 U.S. 278, 33 S.Ct. 465, 57 L.Ed. 835; Fletcher v. Hamlet, 116 U.S. 408, 6 S.Ct. 426, 29 L.Ed. 679; Grace v. Ins. Co., 109 U.S. 278, 3 S.Ct. 207, 27 L.Ed. 932.

It is not denied that the individual members of the Erskine Motors Company were doing business as a copartnership until after the contracts were made and breached, and that no corporation was in existence until after such breach. In Fore v. Tanning Co., 175 N.C. 584, 96 S.E. 48, and in Patterson v. Lumber Co., 175 N.C. 90, 94 S.E. 692, it is held that--

"Where a plaintiff has sued a resident and a nonresident defendant for a joint wrong, the cause of action, as a legal proposition, must be taken and construed as the complaint presents it, and, in such cases, on motion to remove to the federal court, by reason of the alleged fraudulent joinder with a resident defendant, the right to removal does not arise from general allegation of bad faith or fraud on the part of plaintiff, however positive, but the relevant facts and circumstances must be stated with such fullness and detail and be of such kind as to clearly demonstrate or compel the conclusion that a fraudulent joinder has been made."

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